Denmark’s house price crash continues
Latest figures from Statistics Denmark show that the collapse in domestic house prices continued in December, sending the annualised decrease to -8.7% for a typical family home.
Prices also fell on flats and second homes. Overall residential property prices are down -22% since the market peaked in 2007.
Realkredit Danmark, the covered bond specialist of Danske Bank, said that the falls represent the biggest drop in house prices for 70 years in the Danish market, reported Børsen.
“On the basis of today’s figures, we can say that we have just about passed the price reductions we saw in the wake of the ‘kartoffelkur’ and tax reforms of 1986-1993,” said Christian Heinig, Realkredit chief economist.
The kartoffelkur was a policy introduced in 1986 to improve Denmark’s balance of trade, but one of its outcomes was a significant increase in the cost of mortgage borrowing.
Heinig said that historically house price falls were followed by gains, but that it was not possible to predict when the current price trend would reverse. However, Realkredit is looking for price stabilisation by the second half of 2012.